The first is the serious maturity mismatch. The loan funds of banks come from deposits, and the term management of deposits and loans is an important topic of bank liquidity management. After the loan is converted into equity, it will bring great pressure to the liquidity management of the bank, because the equity has no time limit. Of course, with the support of the central bank, it is no problem for banks to pay deposit funds normally, but insufficient cash flow can easily push the interbank market interest rate to a higher level, which greatly reduces the effect of monetary easing.

The second is the risk of creditor's rights loss. The target enterprises of debt-to-equity swap are mainly surplus industries, and the medium and long-term prospects are not optimistic. Although the four major asset management companies that undertook debt-to-equity swap and bad debt divestiture made profits afterwards in the 1990s, it was because after joining the WTO, China entered a stage of rapid industrialization, high export growth and economic take-off, and the so-called baggage could easily become high-quality assets. At present, the direction of China's transformation and upgrading is high-end manufacturing and tertiary industry. It is difficult for industries with overcapacity to become the protagonist again, and the corresponding equity also lacks sufficient room for appreciation.

The third is to affect the transformation and upgrading of the banking industry. At present, the banking industry is also facing many difficulties, such as high incidence of non-performing loans, disintermediation of financing, falling interest margins, internet financial shocks and other internal and external troubles. On the surface, debt-to-equity swap has delayed the trend of high incidence of non-performing loans, but it has not cured the symptoms. On the contrary, restructuring and disposing of these shares will take up a lot of energy, which may affect the transformation and upgrading of banks themselves.